Cinergy Reports First Quarter Earnings; Continues Momentum in Growth Strategies.Business Editors CINCINNATI--(BUSINESS WIRE)--April 27, 2000 Cinergy Corp. (NYSE NYSE See: New York Stock Exchange :CIN CIN cervical intraepithelial neoplasia. Cervical intraepithelial neoplasia (CIN) A term used to categorize degrees of dysplasia arising in the epithelium, or outer layer, of the cervix. ) announced today earnings for the first quarter 2000 of $0.87 per share on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis, which is an 8 percent increase over 1999 first quarter earnings of $0.80 per share. The largest component of the increase was due to improvements in the trading, marketing and commodities supply business. In the first quarter, the company continued to build on platforms for growth in its international and domestic non-regulated operations, launched a new e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. initiative, and restructured its corporate administrative and strategic functions. It also instituted a stock purchase plan, one of the first of its kind in the electric industry, under which the company's directors, officers and upper management employees purchased more than 1.6 million shares of Cinergy common stock on the open market at a total cost of $40 million. "We are becoming a major outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. enterprise for businesses here and abroad requiring expertise in power generation and co-generation construction and operation, as well as customer care services such as billing and infrastructure management," said James E. Rogers, vice chairman, president and chief executive officer. "By completing about 30 transactions in the first quarter alone, we added new assets, operations and customers to our portfolio domestically and internationally. A major element of our business model is to provide specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. energy services to targeted industrial and commercial customer groups." Some of the activities this past quarter: -- The companies within the Cinergy Investments business unit entered into contracts with projected revenues of nearly $200 million. Trigen-Cinergy Solutions signed energy service agreements with Millennium Specialty Chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. for its Jacksonville, Fla., facility and an agreement to provide chilled chill n. 1. A moderate but penetrating coldness. 2. A sensation of coldness, often accompanied by shivering and pallor of the skin. 3. water to Vistana, a large vacation development in Orlando, Fla. -- Cadence cadence, in music, the ending of a phrase or composition. In singing the voice may be raised or lowered, or the singer may execute elaborate variations within the key. Network has quickly expanded its cost-reduction services for multi-site enterprises to include Web-based energy auctions and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. expense management. Cadence serves more than 60,000 individual locations throughout the U.S. and Canada. It also received an influx of new capital from Insight Capital Partners and MSD (MicroSoft Diagnostics) A utility that accompanied Windows 3.1 and DOS 6 that reported on the internal configuration of the PC. A variety of information on disks, video, drivers, IRQs and port addresses was provided. Capital, the private investment firm of Michael Dell Michael Saul Dell (born February 23, 1965, in Houston, Texas) is the founder and CEO of Dell, Inc. Biography Early life and education The son of an orthodontist, Dell was born in to an upper-class Jewish family and attended Herod Elementary School in Houston, . -- VESTAR, formerly Cinergy Business Solutions, signed contracts for facility improvements with 12 new customers, including the first phase of a $25 million Ohio University Ohio University, main campus at Athens; state supported; coeducational; chartered 1804, opened 1809 as the first college in the Old Northwest. There are additional campuses at Chiillicothe, Lancaster, and Zanesville, as well as facilities throughout the state. energy performance plan. -- The international business unit expanded its role in Central and Eastern Europe Eastern Europe The countries of eastern Europe, especially those that were allied with the USSR in the Warsaw Pact, which was established in 1955 and dissolved in 1991. with the acquisition of a structured power transaction business based in the Czech Republic Czech Republic, Czech Česká Republika (2005 est. pop. 10,241,000), republic, 29,677 sq mi (78,864 sq km), central Europe. It is bordered by Slovakia on the east, Austria on the south, Germany on the west, and Poland on the north. . CZECHPOL ENERGY brings expertise and the ability to buy and resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. power throughout much of Europe. The acquisition included eight existing transactions with projected revenues of more than $200 million. International's portfolio of renewable generating assets continued to grow with the acquisition of additional wind turbines in Wyoming and with consolidation of our ownership in a Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. mini hydro hy·dro adj. Hydroelectric. n. pl. hy·dros 1. Hydroelectric power. 2. A hydroelectric power plant. facility. The transfer to Cinergy of the 29 megawatt meg·a·watt n. Abbr. MW One million watts. meg  a·watt Redditch generating station in the United Kingdom, which was negotiated at the time of the sale of the company's share of Midlands Electricity The Midlands Electricity Board was formed in 1947, under the Electricity Act of that year. The counterpart of the East Midlands board, it served southern, and western parts of Warwickshire, as well as the counties of Worcestershire, Herefordshire, Shropshire, and Staffordshire, as plc, also was completed. -- With e-commerce changing the way businesses operate, Cinergy joined a consortium of 14 other leading energy companies planning to launch a for-profit, single portal Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the marketplace for the purchase of goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. between the energy industry and its suppliers this year. By building an online marketplace, the consortium expects to generate significant benefits for purchasers and suppliers alike by streamlining purchasing processes Purchasing Purchasing is the formal process of buying goods and services. The Purchasing Process can vary from one organization to another but there are some key elements that are common throughout The process usually starts with a 'Demand' or requirements , shortening purchase cycles and increasing accessibility between buyers and sellers. As the company prepares for the changing environment in the energy industry, it continues its efforts to improve effectiveness and productivity. A reorganization of the corporate center, expected to save at least $25 million in 2001, was announced to reduce the size of the company's administrative and strategic functions from about 1,120 to about 540 positions. Approximately 340 positions will be moved to the business units, and 240 jobs will be eliminated. A limited early retirement program and unfilled vacancies are expected to reduce the number of employees displaced displaced see displacement. to 45, who will be able to seek other jobs inside and outside the company or choose a severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when plan. "We continue to seek value in every aspect of our operations and have been very effective in driving down costs," said Rogers. "We have improved productivity and cut our purchasing expenses and fuel costs, while improving reliability at the same time." Despite a much warmer than normal winter, net income for the first quarter 2000 was $138.4 million, or 8 percent greater than $127.2 million in the first quarter a year ago. Earnings from regulated operations, including the supply business, increased $0.21 per share in the first quarter 2000 compared with a year earlier. This increase was partially offset by a decrease in contributions from non-regulated investment activities of $0.14 per share, primarily reflecting the loss of earnings from the sale of the company's share in Midlands Electricity plc in the third quarter of 1999. Cinergy Corp. is one of the nation's leading diversified diversified (di·verˑ·s energy companies, with a total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. of $7.2 billion and assets of $10 billion. Cinergy owns or operates more than 16,500 megawatts of electrical and combined heat plant generation that is either operational or under development. It also has 55,000 miles of electric and gas transmission lines in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and abroad and approximately 9,000 employees in nine countries. Its largest operating companies operating company A business that engages in transactions with outsiders. , The Cincinnati Gas & Electric Company and PSI Energy, Inc., serve more than 1.4 million electric customers and 478,000 gas customers in Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Ohio and Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. . Cinergy is active in U.S. power and natural gas markets and maintains a 24-hour-a-day, seven-day-a-week trading operation. The interconnections of Cinergy's Midwestern transmission assets give it access to 37 percent of the total U.S. energy consumption. In 1998 the New York Mercantile Exchange New York Mercantile Exchange (NYMEX) The world's largest physical commodity futures exchange. selected Cinergy to be its transmission hub for Midwest electricity futures trading, which has become the most liquid, active hub A central connecting device in a network that regenerates signals on the output side to keep the signal strong. Also called a "multiport repeater." Contrast with passive hub and intelligent hub. See hub. in the United States. In addition to its U.S. operations, Cinergy owns and operates power generation, transmission and distribution assets in the Czech Republic, Spain, the United Kingdom, Zambia, and Estonia. Cinergy is also active in European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. gas and electricity markets. Statements made in this release that convey the company's or management's intentions, expectations or predictions of the future are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . The company's actual results could differ materially from those projected in the forward-looking statements, and there can be no assurance that estimates of future results will be achieved. Please refer to the company's SEC filings for additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements. Following are summaries of Cinergy's unaudited consolidated financial information for the first quarter 2000.
CINERGY CORP.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For the Period Ended March 31, 2000
(unaudited)
(in thousands, except per share amounts)
----------------------------------------------------------------------
Quarter Ended
--------------------------
2000 1999
------------ -----------
Operating Revenues
Electric $1,066,697 $968,532
Gas 498,728 421,308
Other 17,652 12,439
------------ -----------
1,583,077 1,402,279
Operating Expenses
Fuel used in electric production 186,091 198,228
Gas purchased 406,145 334,402
Purchased and exchanged power 314,687 234,941
Other operation 194,127 194,577
Maintenance 51,296 49,971
Depreciation 82,631 78,839
Amortization of phase-in deferrals 6,413 6,547
Amortization of post-in-service deferred
operating expenses 1,091 1,091
Taxes other than income taxes 66,131 69,534
------------ -----------
1,308,612 1,168,130
Operating Income 274,465 234,149
Other Income and (Expenses) - Net
Allowance for equity funds used during
construction 902 775
Phase-in deferred return 1,040 1,464
Equity in earnings of unconsolidated
subsidiaries 1,842 44,682
Other - net (4,445) (14,125)
------------ -----------
(661) 32,796
Interest and Other Charges
Interest on long-term debt 52,404 50,077
Other interest 1,180 12,648
Allowance for borrowed funds used during
construction (2,154) (1,953)
Preferred dividend requirements of
subsidiaries 1,363 1,364
------------ -----------
52,793 62,136
Income Before Taxes 221,011 204,809
Income Taxes 82,572 77,564
------------ -----------
Net Income $138,439 $127,245
Other comprehensive income, net of tax (771) (8,466)
------------ -----------
Comprehensive Income $137,668 $118,779
Average Common Shares Outstanding 158,923 158,746
Earnings Per Common Share
Net Income $0.87 $0.80
Earnings Per Common Share - Assuming Dilution
Net Income $0.87 $0.80
Dividends Declared Per Common Share $0.45 $0.45
CINERGY CORP.
SELECTED OPERATING STATISTICS
For the Period Ended March 31, 2000
(In thousands, except where noted)
----------------------------------------------------------------------
Quarter Ended
--------------------
% Increase/
2000 1999 (Decrease)
--------- --------- -----------
Operating Revenues
Residential $ 367,111 $ 387,598 (5.3)
Commercial 222,023 217,632 2.0
Industrial 182,772 176,917 3.3
Other retail 32,056 36,277 (11.6)
Firm power sales 32,779 41,780 (21.5)
Non-firm power sales 351,116 224,299 56.5
All other 35,276 30,052 17.4
--------- --------- -----------
Total regulated revenues 1,223,133 1,114,555 9.7
Non-regulated revenues 359,944 287,724 25.1
--------- --------- -----------
Total revenues $ 1,583,077 $ 1,402,279 12.9
KWH Sales
Residential 3,999,092 4,486,905 (10.9)
Commercial 3,130,823 3,015,327 3.8
Industrial 4,654,660 4,328,626 7.5
Other retail 447,940 444,511 0.8
Firm power sales 1,163,358 1,443,033 (19.4)
Non-firm power sales 14,567,332 9,250,842 57.5
--------- --------- -----------
Total regulated sales 27,963,205 22,969,244 21.7
Non-regulated sales 221,860 172,359 28.7
--------- --------- -----------
Total sales 28,185,065 23,141,603 21.8
MCF Sales
Residential 16,374 15,918 2.9
Commercial 6,582 7,561 (12.9)
Industrial 1,045 1,209 (13.6)
Other retail 963 868 10.9
All other 191 155 23.2
--------- --------- -----------
Total regulated sales 25,155 25,711 (2.2)
Gas transportation 14,686 13,469 9.0
--------- --------- -----------
Total regulated sales and
transportation 39,841 39,180 1.7
Non-regulated sales 126,344 147,783 (14.5)
--------- --------- -----------
Total sales 166,185 186,963 (11.1)
Customers (end of period)
Electric 1,473,075 1,445,752 1.9
Gas 482,082 471,227 2.3
KWH
Generated - net 15,520,924 14,624,683 6.1
Purchased and exchanged power 13,352,540 9,036,651 47.8
--------- --------- -----------
Total 28,873,464 23,661,334 22.0
Losses and company use 910,259 692,090 31.5
--------- --------- -----------
Total regulated sales 27,963,205 22,969,244 21.7
Fuel Cost Per Million Btu (Consumed) $1.22 $1.24 (1.6)
MCF
Natural gas purchased 27,229 29,900 (8.9)
Transportation received 11,034 12,503 (11.7)
Produced 105 42 150.0
--------- --------- -----------
Total 38,368 42,445 (9.6)
Gas transportation 14,686 13,469 9.0
Losses and company use (1,473) 3,265 (145.1)
--------- --------- -----------
Total regulated sales 25,155 25,711 (2.2)
Cost per MCF Purchased (cents) 267.52 218.15 22.6
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